In a significant development, a EU court adviser has thrown their weight behind the European Commission’s substantial tax order to tech giant Apple.
This ongoing tax dispute stems from allegations that Apple received illegal state aid from Ireland through preferential tax treatment.
While the adviser’s opinion is not binding, it carries considerable influence in the court’s final decision.
The outcome of this case, eagerly awaited by many, will have profound implications for both Apple and Ireland, given the substantial financial stakes involved.
Advocate General’s Opinion on Apple’s Tax Order
The Advocate General’s opinion on Apple’s tax order supports the multibillion tax order issued by the EU Court. The Advocate General proposes setting aside the judgement of the lower General Court and refers the case back to the General Court for a new decision.
The Advocate General believes that the General Court made errors in law in its ruling, specifically in failing to show that intellectual property licences held by Apple subsidiaries in Ireland should be attributed for tax purposes to the Irish branches. Additionally, the General Court did not adequately assess the substance and consequences of methodological errors that undermined the validity of the tax rulings.
The Advocate General’s opinion highlights these errors and suggests a new assessment by the General Court to correct them. If the court follows the Advocate General’s opinion, Apple will have to pay the £13.1 billion plus interest to Ireland.
Mistakes in the General Court’s Judgment
An analysis of the General Court’s ruling reveals significant errors in its assessment of the allocation of intellectual property licences held by Apple subsidiaries in Ireland for tax purposes.
The General Court failed to demonstrate that these licences should be allocated to the Irish branches for tax purposes. Furthermore, the court did not adequately evaluate the substance and consequences of methodological errors that undermined the validity of the tax rulings.
These errors ultimately led to the overturning of the European Commission’s finding that Apple had underpaid taxes. The Advocate General, in his opinion, highlights these errors and suggests that the case should be referred back to the General Court for a new decision.
It remains to be seen whether the court will follow the Advocate General’s opinion and rectify these errors in its final judgement.
Background of the Apple Tax Case
The Apple Tax Case refers to a legal dispute between Apple Inc. and the European Commission over allegations of illegal state aid provided to Apple by the Irish government. The case stems from the European Union’s investigation into certain tax arrangements between Apple and Ireland, which allowed the company to significantly reduce its tax liabilities.
In 2016, the European Commission concluded that Ireland had granted undue tax benefits to Apple, amounting to illegal state aid under EU rules. The Commission determined that these tax benefits allowed Apple to pay substantially less tax on its profits earned in Europe compared to other companies. As a result, the European Commission ordered Ireland to recover €13 billion in unpaid taxes from Apple.
Both Apple and the Irish government vehemently denied
The Apple tax case originated in 1991 and 2007 with tax rulings issued by Revenue, substantially lowering the tax paid by Apple in Ireland. A European Commission probe later found that these rulings resulted in a significant reduction in the tax amount paid by Apple.
As a result, the commission ordered Apple to pay £11.5 billion in underpaid taxes to Ireland, along with £1.1 billion worth of interest. Apple and Ireland appealed the commission’s findings to the EU’s General Court, which subsequently annulled the commission’s findings in July.
However, the commission appealed the decision, leading to the recent opinion of the EU court adviser supporting the multibillion tax order to Apple. The final judgment is expected to be issued in approximately six months.
Implications of the Advocate General’s Opinion
The Advocate General’s opinion on the Apple tax case carries significant implications for the future decision-making process. The opinion proposes setting aside the judgment of the lower General Court and refers the case back for a new decision.
The Advocate General highlights errors in the General Court’s ruling, particularly regarding the attribution of intellectual property licences for tax purposes. The errors led to the overturning of the commission’s finding that Apple underpaid taxes.
If the court follows the Advocate General’s opinion, the case will be reassessed, potentially resulting in Apple having to pay the £11.2 billion in underpaid taxes plus interest to Ireland.
The final judgment is expected to be issued in approximately six months.
Source: Bloomberg
Recent Developments and Financial Impact
Regarding recent developments and the financial impact of the Apple tax case, there has been a reduction of £259 million in the total value of assets held in the escrow account over the past year. This decrease can be attributed to increased yields in global fixed income markets and fund operating expenses. The Comptroller and Auditor General’s report on the financial status of the escrow account revealed that the assets in the account were valued at £13.374 billion at the end of December. The payment from Apple remains in the escrow account until the final judgment is issued, which is expected to be in approximately six months. The following table provides a breakdown of the financial status of the escrow account:
| Category | Value (£ billion) |
|---|---|
| Assets in Escrow Account | 13.374 |
| Reduction in Value | 0.259 |
These recent developments highlight the ongoing financial implications of the Apple tax case, as the value of the assets held in the escrow account continues to fluctuate.
Conclusion
In conclusion, the support expressed by the EU court adviser for the multibillion tax order to Apple adds weight to the European Commission’s contention that the tech giant received illegal state aid.
The ongoing tax dispute has significant implications for both Apple and Ireland, as the court’s final judgment will determine whether Apple is required to pay €13 billion in unpaid taxes.
This case highlights the complexities and financial impact of multinational corporations’ tax practices.
As the saying goes, ‘money talks,’ and the outcome of this case will speak volumes.
